Fintech Initiatives Continue to Power Core Funding Transformation

MVB Financial Corp. reported net income of $11.8 million, or $1.00 basic and $0.92 diluted earnings per share for the three months ended September 30, 2021.

“MVB’s third quarter results and actions reflect our embrace of the transformative power of technology in our industry”

“MVB’s third quarter results and actions reflect our embrace of the transformative power of technology in our industry,” said Larry F. Mazza, President and CEO, MVB Financial. “During the third quarter, we made further progress in our efforts to build a world-class deposit franchise, with noninterest-bearing Fintech deposits now representing nearly 42% of our total deposit funding. We remain the clear leader in the online gaming segment, and the wind is at our back, with 33 states, 29 of which are operational, representing 57% of the U.S. adult population, having legalized sports betting to date. In addition to the beneficial impact to our margin, especially in a rising rate environment, low-cost funding from our Fintech business allows us to redeploy resources to faster-growth markets and additional technology spend and investments. Toward that end, during the third quarter, we exited our Southern West Virginia banking market, entered into a partnership agreement with NYDIG that allows our Fintech clients to offer Bitcoin-related products and expanded our investment in Interchecks Technologies, Inc., a Fintech portfolio investment that has become more integrated in our core business.”

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THIRD QUARTER 2021 HIGHLIGHTS

• Strong core deposit growth reflects continued expansion of Fintech and gaming verticals
  • Noninterest-bearing (“NIB”) deposits were $999.3 million as of September 30, 2021, up $66.7 million, or 7%, and $356.5 million, or 55%, from June 30, 2021 and September 30, 2020, respectively. NIB deposits as a percentage of total deposits were 42% as of September 30, 2021, as compared to 42% and 34% as of June 30, 2021 and September 30, 2020, respectively.
  • Fintech deposits totaled $975.7 million as of September 30, 2021, up $209.8 million, or 27%, and $610.9 million, or 167%, from June 30, 2021 and September 30, 2020, respectively.
  • Gaming deposits, which are included in total Fintech deposits, totaled $774.1 million as of September 30, 2021, up $178.2 million, or 30%, and $567.5 million, or 275%, from June 30, 2021 and September 30, 2020, respectively.
  • Since the ruling by the U.S. Supreme Court that overturned the Professional and Amateur Sports Protection Act in 2018, 33 states have passed legislation that allows sports betting including 19 since the start of 2020, representing approximately 57% of the U.S. adult population.

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• Loan expansion despite banking center sales and PPP forgiveness
  • Loans grew $66.9 million, or 4%, compared to the quarter ended June 30, 2021. The loan growth was despite the Company selling $53.9 million loans in the previously-announced branch sale and recognizing $60.0 million of PPP loan forgiveness during the quarter.
• Continued strong growth in tangible book value per share
  • Tangible book value (“TBV”) per share, a non-U.S. GAAP measure, was $21.64 as of September 30, 2021, an increase of 5% and 16% from June 30, 2021 and September 30, 2020, respectively. A reconciliation of TBV to its most comparable U.S. GAAP measure is included below.
  • As a result of this strong capital position and earnings as of September 30, 2021, the Company increased the quarterly dividend to $0.14 per share for the third quarter of 2021, up from $0.12 per share in the second quarter, an increase of 17%.
  • The Community Bank Leverage Ratio was 12.0% compared to 11.0% as of June 30, 2021. The increase is due to increases in capital due to earnings outpacing the increase in average assets and completion of the $30 million subordinated debt offering.
• Recent corporate actions reflect a focused reallocation of resources amid Fintech success
  • During the third quarter, MVB completed the sale of four banking centers in Southern West Virginia, recording a pre-tax gain of $10.8 million, marking its complete exit from the market. The transformation of the funding base resulting from the pivot toward Fintech has allowed the Company to eliminate physical infrastructure, most notably its banking center footprint, which has been reduced by nearly half, from 15 in 2018 to eight currently.
  • Resources have been refocused on MVB’s core, higher-growth markets and new business verticals. For example, in April 2021, MVB acquired Trabian Technology, Inc. (“Trabian”), a software development company that builds digital products, web and mobile applications for financial institutions, to enhance development of technology to support both internal efficiencies and external client growth. During the three months ended September 30, 2021, there was an increase of 16 employees within Trabian, primarily due to the continued hiring of software developers. Also during the third quarter of 2021, the Company entered into a new partnership agreement with NYDIG, a leading technology and financial services firm dedicated to Bitcoin, that allows MVB’s Fintech clients to offer Bitcoin-related products and expanded its investment in Interchecks Technologies, Inc. (“Interchecks”). Interchecks is a leading payment disbursement platform, which is a Fintech portfolio investment whose business and founding principles are becoming more integrated into MVB’s Fintech business vertical. During the three months ended September 30, 2021, Interchecks entered into a management contract with MVB Technology, LLC to support the continued development and sales of the Grand product.

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